CONTRACT LAW REVIEW NOTES
EXPRESS TERMS
Three Important Distinctions
• “Mere Puff” or Sales Talk - A boastful or flowery statement made in advertising a product or
service.
• Representation - A statement made which induces another party to enter into a contract but
which does not form part of the contract itself.
• Term - a promise, undertaking or “warranty” that becomes part of the contract itself.
Mere Sales Talk Representations Terms
Liability for Liability for
No Legal
Damages Damages
Consequences
For misrepresentation, For breach of contract
The ideais that you
but requires proof of (automatic right - no
shouldn’t take them
fault or negligence need to prove fault or
seriously
negligence)
Warranty v Warranty
• Contract law, confusingly, uses the term “warranty” in two distinct ways.
• Meaning 1 - A general statement of promise that is incorporated into the contract as a term.
• Meaning 2 - A specific sub-type of contractual term, the breach of which entitles a party to
some damages/reward, but which does not end the contract.
,Lord Denning - Oscar Chess Ltd. v Williams
“In saying that he must prove a warranty, I use the word ‘warranty’ in its ordinary English meaning to
denote a binding promise...That is the meaning which it has borne in English law for 300 years.”
“During the last hundred years, however, the lawyers have come to use the word ‘warranty’ in another
sense. They use it to denote a subsidiary term in a contract as distinct from a vital term which they call a
condition.”
What is mere sales talk?
Smith v Lynn (1954) 85 ILTR 57
• A property advertised as being “in excellent structural and decorative repair” was auctioned.
• Smith was successful in this auction, outbidding the defendant Lynn.
• Then, six weeks later, Smith put the property up for sale again, using the exact same
advertisement.
• Lynn was successful in the second auction.
• It turned out that the property had extensive woodworm damage.
• Lynn refused to complete payment, arguing that
• there had been a misrepresentation. Smith sued for specific performance.
• Curran J held in favour of Smith. He argued that the statements in the advertisement were
classic sales talk, and not something that Lynn could reasonably rely upon.
Curran J - Smith v Lynn
“[A]dvertisements, however, must be looked at in their true perspective. They do not purport to be
detailed reports by experts as to the condition of the property to be sold. It is common knowledge that
the purpose of such advertisements is to draw attention to the good points of the property, and that one
usually finds in such advertisements rather flourishing statements.”
• The important distinction is the distinction between representations and terms...
• ...though this has become less important due to the possibility of claiming damages for
negligent misrepresentation or “damages in lieu” of rescission for cases of innocent
misrepresentation.
I. What/What is not a Term?
Reduced
to writing
Context of Agreement Context of Agreement
Things said and done, Things said and done,
in a particular context, in a particular context,
resulting in contractual Not
resulting in contractual
agreement reduced
agreement
to writing
, The Express Term Rule
In order to work out whether somethingthat is
said or written forms part of a contract (i.e. is a
termof the contract), courts look to the objective
intention of the parties, as to be inferred fromthe
totality of the evidence.
Context of Agreement
Things said and done,
in a particular context,
resulting in contractual Not
agreement reduced
to writing
Oscar Chess Ltd. v Williams [1957] 1 WLR 370
• The defendant purchased a new car from the plaintiff (a garage) on the basis of a part-exchange
for his old car.
• The salesman in the garage was a neighbour of the defendant. He had been given a lift in the
defendant’s car on several occasions.
• He thought the car was a 1948 Morris, and the defendant presented evidence to him that
suggested this was the case (a registration book).
• The salesman then looked up a book which gave guide prices for secondhand cars and gave the
defendant £290 towards the purchase of a new car.
• Eight months later, it was discovered that the car was not a 1948 Morris but, rather, a 1939
Morris.
• This car would have been worth £175.
• It was clear that the defendant had not lied about the age of the car; he was working off the
information in the registration book.
• Nevertheless, the garage brought a case for damages against him on the basis of a breach of
contract.
• They claimed that the age of the car was a crucial term of the contract, breach of which entitled
them to recover damages.
• The CoA disagreed, holding that it was merely an innocent misrepresentation.
• Lord Denning argued that the crucial question was whether the age of the car was intended to
be a “warranty” (meaning 1) of the contract. And to work this out you needed to look to the
intention of the parties...
• ...but what does that mean?
Lord Denning - Oscar Chess Ltd. v Williams
“It is sometimes supposed that the tribunal must look into the minds of the parties to see what they
themselves intended. That is a mistake. Lord Moulton made it quite clear, in Heilbut, Symons & Co. v.
Buckleton [1913] AC, that ‘The intention of the parties can only be deduced fro”m the totality of the
evidence’...”
“The question whether a warranty was intended depends on the conduct of the parties, on their words
and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably
infer that a warrant was intended, that will suffice.”
EXPRESS TERMS
Three Important Distinctions
• “Mere Puff” or Sales Talk - A boastful or flowery statement made in advertising a product or
service.
• Representation - A statement made which induces another party to enter into a contract but
which does not form part of the contract itself.
• Term - a promise, undertaking or “warranty” that becomes part of the contract itself.
Mere Sales Talk Representations Terms
Liability for Liability for
No Legal
Damages Damages
Consequences
For misrepresentation, For breach of contract
The ideais that you
but requires proof of (automatic right - no
shouldn’t take them
fault or negligence need to prove fault or
seriously
negligence)
Warranty v Warranty
• Contract law, confusingly, uses the term “warranty” in two distinct ways.
• Meaning 1 - A general statement of promise that is incorporated into the contract as a term.
• Meaning 2 - A specific sub-type of contractual term, the breach of which entitles a party to
some damages/reward, but which does not end the contract.
,Lord Denning - Oscar Chess Ltd. v Williams
“In saying that he must prove a warranty, I use the word ‘warranty’ in its ordinary English meaning to
denote a binding promise...That is the meaning which it has borne in English law for 300 years.”
“During the last hundred years, however, the lawyers have come to use the word ‘warranty’ in another
sense. They use it to denote a subsidiary term in a contract as distinct from a vital term which they call a
condition.”
What is mere sales talk?
Smith v Lynn (1954) 85 ILTR 57
• A property advertised as being “in excellent structural and decorative repair” was auctioned.
• Smith was successful in this auction, outbidding the defendant Lynn.
• Then, six weeks later, Smith put the property up for sale again, using the exact same
advertisement.
• Lynn was successful in the second auction.
• It turned out that the property had extensive woodworm damage.
• Lynn refused to complete payment, arguing that
• there had been a misrepresentation. Smith sued for specific performance.
• Curran J held in favour of Smith. He argued that the statements in the advertisement were
classic sales talk, and not something that Lynn could reasonably rely upon.
Curran J - Smith v Lynn
“[A]dvertisements, however, must be looked at in their true perspective. They do not purport to be
detailed reports by experts as to the condition of the property to be sold. It is common knowledge that
the purpose of such advertisements is to draw attention to the good points of the property, and that one
usually finds in such advertisements rather flourishing statements.”
• The important distinction is the distinction between representations and terms...
• ...though this has become less important due to the possibility of claiming damages for
negligent misrepresentation or “damages in lieu” of rescission for cases of innocent
misrepresentation.
I. What/What is not a Term?
Reduced
to writing
Context of Agreement Context of Agreement
Things said and done, Things said and done,
in a particular context, in a particular context,
resulting in contractual Not
resulting in contractual
agreement reduced
agreement
to writing
, The Express Term Rule
In order to work out whether somethingthat is
said or written forms part of a contract (i.e. is a
termof the contract), courts look to the objective
intention of the parties, as to be inferred fromthe
totality of the evidence.
Context of Agreement
Things said and done,
in a particular context,
resulting in contractual Not
agreement reduced
to writing
Oscar Chess Ltd. v Williams [1957] 1 WLR 370
• The defendant purchased a new car from the plaintiff (a garage) on the basis of a part-exchange
for his old car.
• The salesman in the garage was a neighbour of the defendant. He had been given a lift in the
defendant’s car on several occasions.
• He thought the car was a 1948 Morris, and the defendant presented evidence to him that
suggested this was the case (a registration book).
• The salesman then looked up a book which gave guide prices for secondhand cars and gave the
defendant £290 towards the purchase of a new car.
• Eight months later, it was discovered that the car was not a 1948 Morris but, rather, a 1939
Morris.
• This car would have been worth £175.
• It was clear that the defendant had not lied about the age of the car; he was working off the
information in the registration book.
• Nevertheless, the garage brought a case for damages against him on the basis of a breach of
contract.
• They claimed that the age of the car was a crucial term of the contract, breach of which entitled
them to recover damages.
• The CoA disagreed, holding that it was merely an innocent misrepresentation.
• Lord Denning argued that the crucial question was whether the age of the car was intended to
be a “warranty” (meaning 1) of the contract. And to work this out you needed to look to the
intention of the parties...
• ...but what does that mean?
Lord Denning - Oscar Chess Ltd. v Williams
“It is sometimes supposed that the tribunal must look into the minds of the parties to see what they
themselves intended. That is a mistake. Lord Moulton made it quite clear, in Heilbut, Symons & Co. v.
Buckleton [1913] AC, that ‘The intention of the parties can only be deduced fro”m the totality of the
evidence’...”
“The question whether a warranty was intended depends on the conduct of the parties, on their words
and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably
infer that a warrant was intended, that will suffice.”
